MPS challenges Intesa and relaunches the Italian banking risk. The board of directors of Monte dei Paschi di Siena has given the green light to Luigi Lovaglio’s plan to promote two separate offers on Banco Bpm and Banca Generali.
MPS thus moves from defense to counter-offensive. The objective is to build an alternative to the takeover bid launched by Intesa Sanpaolo and preserve the autonomy of the Sienese group, transforming MPS from a possible prey to the protagonist of a new banking aggregation.
The move completely reopens the Italian risk. The yes of the Board of Directors does not mean that the operations have already been carried out: the passage of the MPS shareholders will be needed and, above all, the position of the strong shareholders of Banco Bpm and Banca Generali will be decisive.
MPS moves from defense to counteroffensive
Intesa Sanpaolo’s offer on MPS was announced in June for 30.6 billion euros and, given the price trend, it is now worth around 36 billion. The project also involves the sale to Unipol of a significant part of the Monte network, which will then be merged into Bper: 635 branches, together with the brand and other activities.
It is precisely the scenario of a dismemberment of the group that Lovaglio has contested in recent weeks. The response studied by Siena therefore reverses the perspective: MPS would no longer be just the bank subject to an acquisition, but would in turn become an aggregator.
The offers would be made using MPS shares. Banco Bpm is worth around 25 billion euros on the stock exchange, Banca Generali around 8 billion and MPS around 36 billion. The combination would lead to a hub with a potential capitalization close to 70 billion euros, still lower than the approximately 121 billion of Intesa, but sufficient to change the balance of Italian credit.
The yes of the Board of Directors does not close the game
The most important step to understand what happens now is that the Council’s decision is not enough.
Public offer rules limit the ability of a company under offer to take defensive measures without shareholder consent. The project will therefore also have to pass through the MPS assembly.
This makes the partners of the Sienese bank decisive, starting with Delfin and Francesco Gaetano Caltagirone, already protagonists of the balances that revolve around Mediobanca and Generali.
The difficulty is also on the other side of the table: to transform the two offers into an industrial project it will be necessary to convince the shareholders of the target companies.
Crédit Agricole and Generali hold the keys to the plan
Banco Bpm has a partner that weighs heavily: Crédit Agricole owns 29.3% of the capital. The French group had already shown coldness towards an aggregation between Banco BPM and MPS and in recent weeks that project had been shelved. Banco Bpm had then reopened to the possibility of integration with the Italian activities of Crédit Agricole itself.
At Banca Generali the issue is even more evident. Generali controls approximately 51% of the company and without Leone an operation appears difficult to carry out.
However, MPS has important leverage: through Mediobanca it owns approximately 13% of Generali. It is one of the reasons why the game no longer concerns only three banks, but also directly involves Trieste and Paris.
Because the move changes banking risk
The two operations would have different but complementary logics.
With Banco Bpm, Mps would above all strengthen the commercial bank and its presence in the area, trying to build that third national hub capable of getting closer to the two leaders Intesa and UniCredit.
Banca Generali would instead add a strong presence in savings management and private banking, integrating with the activities of Mediobanca which have already entered the Monte’s perimeter.
The difference compared to the Intesa project is, therefore, substantial. Intesa aims to integrate part of MPS and sell another to Unipol-Bper. Lovaglio aims, however, to conserve the Monte and expand its perimeter.
What the stock market said
The first market reaction shows, however, that investors do not yet consider the success of the strategy to be a given.
In Thursday’s session MPS closed down 0.3%, while Banco BPM gained 0.6% and Banca Generali 1.2%. Intesa Sanpaolo rose by 0.4%, while Unipol lost 2.9%.
The signal is interesting: the market has above all rewarded the possible objectives of the offers, while prudence linked to costs, exchange ratios and the complexity of the operation still prevails on the MPS stock.
What happens now between MPS and Intesa
The challenge has therefore just begun. MPS must transform the green light from the Board of Directors into a proposal capable of convincing its shareholders, finding an agreement with the strong shareholders of Banco Bpm and Banca Generali and overcoming the necessary regulatory steps.
Intesa, in the meantime, keeps an already defined and financially structured offer on the table.
The real question is no longer just whether MPS will be able to defend itself. It is which of the two visions will be able to convince shareholders and the market: the entry of Monte into the Intesa group with the subsequent sale of part of the activities, or the transformation of Siena into the center of a new Italian banking hub.
It is on this confrontation that, after Lovaglio’s move, the next chapter of the risk will be played out.
